Getting Good Credit for Your Child Sending Your Child Off to College: Helping Them Get a Credit Card | CreditShout

Getting Good Credit for Your Child Sending Your Child Off to College: Helping Them Get a Credit Card

By Kevin / July 23, 2009


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If your child is having trouble getting a credit card, or has been rejected after numerous applications, you may be wondering how you can help them get a good start and establish a good credit history. Chances are they were denied credit due to insufficient credit history. Here’s some good options you have to help them get started and get credit that they can learn to use responsibly.

The first option is letting your child use your credit card accounts. If your child is trustworthy and responsible, adding them to your accounts allows them to use your credit cards and will be reported to their credit history. This is a great way to help them get a start on their credit history.

You can also consider car loans. This can be a great choice because they may already need a vehicle if they’re moving away to college. Often parents are the ones that end up providing cars for their teenage and college-age children, although helping them get a car loan themself may be a better choice. Help your child get a great start on their credit history by co-signing on a car loan. If their name is on the contract they’ll receive credit on their report for all on-time (and late) car payments. Of course, stick with a car loan they can easily afford and help them learn the importance of on-time payments.

Bank cards can also help benefit a student or teenager that wants to establish credit. While checking and savings accounts aren’t reported to the credit bureaus, opening an account will help them develop a positive history with their bank. This means a better chance that the bank will issue them a credit card in the future which will help improve their credit. Bank of America in particular has a number of student credit cards that may be a good choice.

Retail and gasoline credit cards are another option. These credit cards are some of the easiest to obtain. Try to choose a store or gas station that your child shops at but won’t be tempted to over-spend. Help them understand that their balance must be paid in full each month and that the credit limit shouldn’t be thought of as extra income.

Lastly, secured credit cards are a good option for many individuals, especially those with poor or no credit history. Secured credit cards require a deposit that is put into a savings account with the credit card issuer. The credit limit on the card is often equal to the deposit. When the cardholder doesn’t make payments for a set amount of time, money owed is taken directly from the savings account. As you can see, secured credit cards prevent a much smaller risk to card issuers because they maintain control of the deposit account and can turn to it if the cardholder fails to make payments. This means that secured credit cards are easier to get and can be acquired by people that may not qualify for unsecured credit cards. The APR on secured credit cards is often much better as well and may be fixed, although you need to watch out for excessive fees and charges.

By starting early and helping your child make these important choices you’re helping to set them up for a financially responsible future. No matter which option you choose, make sure you stress with your child the importance of on-time payments, paying their balance in full each month and avoiding penalties and interest. For further reading, check out “How to Avoid Credit Card Fees”  and “Responsible Credit Card Use in College Students.”

The editorial content on this page is not provided by any of the companies mentioned and has not been reviewed, approved or otherwise endorsed by any of these entities. Opinions expressed here are the author's alone. Additionally, the opinions of the commenters are not necessarily the opinions of this site


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